GameStop shares slump as Reddit rally ebbs

Shares of videogame retailer GameStop Corp slumped on Monday, reversing premarket gains, as recent social media-hyped trading hysteria in other stocks appeared to be dissipating.

GameStop and other companies including cinema operator AMC Entertainment Holdings Inc and headphone maker Koss have seen wild gyrations in their stocks over the past two weeks as amateur investors on forums such as Reddit's WallStreetBets acted in concert to bid up stocks that some U.S. funds had bet against.

The rally catapulted GameStop shares to as high as $483 on Jan. 28 from around $20 a couple of weeks earlier.

They fell back to as low as $51.09 on Friday but rallied during the session to finish 19pc higher.

The volatility has drawn the attention of regulators, although U.S. Treasury Secretary Janet Yellen said on Sunday it was too soon to say whether new policies or regulations were needed.

On Monday, GameStop shares rose before the U.S. stock market opened, but were last down 7.02pc.

AMC shares dropped 10.54pc at $6.11 after hitting a session low of $5.75, its lowest level since January 26. Koss shares lost 5.66pc to trade at $18.85.

Trading volumes in GameStop also appeared to be settling following a record 197.16 million shares traded on Jan. 22 across all U.S. exchanges at the beginning of the slugfest between small investors and Wall Street hedge funds. Still, the 10-day average volume is about 86.1 million shares still well above the stock's 50-day moving average volume of roughly 37.5 million.

Trading volume on Monday eclipsed 19 million shares before 1 p.m.

On WallStreetBets, the tone had changed from the hyper-bullishness for stocks such as GameStop over the past two weeks, with a user Ixt72 wondering "Is the optimism towards GME and AMC still realistic?" while others continued to encourage holding the stocks.